First Nations chiefs to discuss possibility of ownership stake in Trans Mountain pipeline

Steel pipe to be used in the oil pipeline construction of Kinder Morgan Canada’s Trans Mountain expansion project sit on rail cars at a stockpile site in Kamloops, B.C., on May 29, 2018.

DENNIS OWEN/Reuters

Dozens of First Nations leaders will meet in Calgary on Wednesday to discuss whether they should bid for an ownership stake in the Trans Mountain project, a move that would sharpen the division among Indigenous groups over the contentious pipeline.

The Indian Resource Council (IRC), which represents 130 bands that own oil and gas assets, is convening the meeting, bringing together many of its members with other chiefs from First Nations in Alberta and British Columbia who have expressed interest in investing in Trans Mountain.

Ottawa has said it intends to resell the pipeline it purchased for $4.5-billion in May. But the federal government must first complete the fresh consultations ordered by an appeal court in August, when it quashed cabinet approval of the project.

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And Ottawa is not looking to sell the pipeline for at least a year, until it can get past legal challenges that could arise from a second cabinet approval, said one senior federal official, who is unnamed because he was not authorized to comment publicly.

With backing from other Indigenous and environmental groups, three First Nations in British Columbia went to court and succeeded in halting the expansion project that would boost Alberta’s capacity to export crude through Vancouver Harbour by nearly 600,000 barrels a day. Faced with that backlash, the Liberal government has been keen to line up Indigenous communities that would take an ownership stake in the pipeline and benefit from the revenues it would provide.

As Ottawa moves through the latest round of consultation and regulatory review, the IRC is examining how it could launch a bid.

“We want to discuss what the financing models would look like if we were to come to a consensus on if we want buy this [pipeline] or not,” council president Stephen Buffalo said in an interview on Tuesday. Mr. Buffalo said his ideal solution would be to see First Nations across the country take full ownership of the pipeline, but added Indigenous investors could also enter into a joint venture with industry buyers.

Ottawa purchased Trans Mountain and pledged to finance the expansion project after the private-sector developer, Houston-based Kinder Morgan Inc., bailed in the face of continued political opposition and legal challenges.

The derailing of the pipeline expansion sparked angry protests in Alberta, which sees the additional export capacity to the Pacific coast as critical for its battered oil industry.

While Indigenous opposition stalled the project, other First Nations’ leaders have voiced their support and indicated an interest in taking an equity stake in it.

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The IRC met last month with some federal officials to discuss the pipeline expansion. Mr. Buffalo would not identify the officials, but said the discussion was “high level” concerning the broad principles around Indigenous ownership in Trans Mountain. They discussed, among other things, how First Nations might raise capital for such an investment; whether there would be any federal assistance; and what other companies or financial institutions might be willing to partner with them in an ownership structure.

One example cited was the deal concluded last year by two Fort McMurray, Alta.-area bands – the Fort McKay First Nation and the Mikisew Cree First Nation – to purchase a 49-per-cent interest in an oil-storage facility in partnership with Suncor Energy Corp. for $503-million. Given the strong profits generated by the storage tank farm, the two First Nations were able to finance the acquisition in the bond market.

Mr. Buffalo said he has not spoken to Finance Minister Bill Morneau or Natural Resources Minister Amarjeet Sohi about any proposed Indigenous investment, but said some chiefs have had informal discussions with the ministers and senior officials.

A coalition of First Nations from the Athabasca oil sands region indicated its interest in investing in Trans Mountain as early as last spring after Kinder Morgan slammed the brakes on construction. Athabasca Chipewyan First Nation Chief Allan Adam told The Globe and Mail last fall that his community would consider taking an equity stake, saying the pipeline expansion is needed to ensure Alberta gets full value for its crude. Kinder Morgan had signed benefits agreements with some 30 Indigenous communities along the pipeline path and several B.C. chiefs – including Michael LeBourdais from Whispering Pines and Ernie Crey from Cheam First Nation – have long expressed their interest in taking an ownership interest.

However, Ottawa is currently focused on completing its consultations with the B.C. First Nations that launched the court challenge and must avoid any appearance of conflict of interest that would arise from an active effort to sell the pipeline, the senior official said on Tuesday. Officials from the Tsleil-Waututh Nation and the Squamish Nation have already complained the consultations appear to be headed toward a preordained conclusion in which federal cabinet will re-approve the expansion project.

Still, the government has received expressions of interest from would-be buyers in industry, as well as from Indigenous communities, the official said.

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Alberta Premier Rachel Notley warned that any decision about the future ownership of the Trans Mountain pipeline will need to await a final court decision on the project. However, the New Democrat Premier said she supports First Nations’ being involved as owners and reaping some of the benefits.

Ms. Notley added that groups should resolve to minimize conflict at time when some First Nations are looking to purchase part of Trans Mountain and other Indigenous groups are protesting a different gas pipeline in B.C.

“First Nations and Indigenous groups are not homogeneous on [pipelines] and it goes to show that, in fact, there are a number of communities across this country who understand the economic benefit that comes from supporting a sustainable, responsible oil and gas industry,” the Premier said.

MURAT YÜKSELIR AND JOHN SOPINSKI / THE GLOBE

AND MAIL, SOURCE: TILEZEN; OPENSTREETMAP

CONTRIBUTORS; HIU; NATURAL RESOURCES CANADA;

OPEN GOVERNMENT; GRAPHIC NEWS; KINDER MORGAN

MURAT YÜKSELIR AND JOHN SOPINSKI / THE GLOBE AND MAIL

SOURCE: TILEZEN; OPENSTREETMAP CONTRIBUTORS; HIU;

NATURAL RESOURCES CANADA; OPEN GOVERNMENT; GRAPHIC

NEWS; KINDER MORGAN

MURAT YÜKSELIR AND JOHN SOPINSKI / THE GLOBE AND MAIL, SOURCE: TILEZEN; OPENSTREETMAP

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